WAIVER AND AMENDMENT TO CREDIT AGREEMENT

Exhibit 10.2

EXECUTION COPY

WAIVER AND AMENDMENT TO CREDIT AGREEMENT

          WAIVER AND AMENDMENT TO CREDIT AGREEMENT, dated as of October 23, 2007 (this “ Amendment ”), among ATARI, INC., a Delaware corporation, as borrower (the “ Borrower ”), the lenders party to the Credit Agreement referred to below (the “ Lenders ”), and BLUEBAY HIGH YIELD INVESTMENTS (LUXEMBOURG) S.A.R.L., as successor administrative agent (in such capacity, the “ Administrative Agent ”). Capitalized terms used and not otherwise defined herein shall have the meanings given them in the Credit Agreement referred to below.

W I T N E S S E T H :

          WHEREAS, the parties hereto are parties to that certain Credit Agreement, dated as of November 3, 2006 (as amended, supplemented or otherwise modified to, but not including, the date hereof, the “ Credit Agreement ”);

          WHEREAS, the Defaults and Events of Default specified on Schedule 1 hereto have occurred prior to and are continuing as of the date hereof (collectively, the “ Existing Defaults ”); and

          WHEREAS, the Borrower has requested that the Lenders waive the Existing Defaults and amend the Credit Agreement, and the Lenders have agreed to such waiver and amendments on the terms and conditions set forth herein.

          NOW, THEREFORE, it is agreed:

I. Waiver . Subject to the terms and conditions of this Amendment, and in reliance on the representations, warranties and covenants of the Borrower contained herein, from and after the Amendment Effective Date (as defined below), the Lenders waive all Existing Defaults. Nothing herein shall be deemed to constitute a waiver of compliance by the Borrower with its representations, warranties, covenants or obligations under, or compliance with any term, provision or condition of, the Credit Agreement (as amended hereby) or any other Loan Document from and after the Amendment Effective Date.

II. Amendments to the Credit Agreement . Subject to the terms and conditions of this Amendment, and in reliance on the representations, warranties and covenants of the Borrower contained herein, from and after the Amendment Effective Date, the Credit Agreement is amended as follows:

          1. Section 1.01 is amended as follows:

          (a) the definition of “Administrative Agent” is amended by deleting “Guggenheim Corporate Funding, LLC” and substituting therefor “BlueBay High Yield Investments (Luxembourg) S.A.R.L.”;

          (b) the definition of “Affiliate” is amended by inserting immediately before the period at the end thereof the following: “, provided that neither the

Administrative Agent nor any Lender shall be an ‘Affiliate’ as such term is used in this Agreement or in any other Loan Document”;

          (c) the definition of “Aggregate Revolving Commitment” is amended by amending and restating the second sentence thereof as follows: “The Aggregate Revolving Commitment is Ten Million Dollars ($10,000,000).”;

          (d) the definition of “Applicable Rate” is amended by amending and restating the chart set forth therein as follows:

Applicable Rate
Type of Obligation		Eurodollar Borrowing				ABR Borrowing
Revolving Loan			7.00	%			6.00%;

          (e) the definition of “Maturity Date” is amended by deleting “November 3, 2009” and substituting therefor “December 31, 2009”;

          (f) the definition of “Obligations” is amended by amending and restating the parenthetical in the second sentence thereof as follows:

     “(in any case, including such amounts which accrue after the commencement by or against any Credit Party of any proceeding under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, notwithstanding the commencement of such proceeding, and the operation of Section 502(b)(2) of the United States Bankruptcy Code (11 U.S.C. §§ 101, et seq .))”; and

          (g) the following new defined terms are inserted in the appropriate alphabetical order:

     ‘“ Amendment Effective Date ’ means the date the conditions set forth in Part V of the Waiver and Amendment to Credit Agreement are satisfied or waived by the Lenders.

     ‘ Budget ’ shall mean the Borrower’s budget delivered to the Administrative Agent on the Amendment Effective Date pursuant to paragraph (b) of Part V of the Waiver and Amendment to Credit Agreement, as such Budget is amended, amended and restated, supplemented or otherwise modified from time to time with the Administrative Agent’s prior written consent, which shall not be unreasonably withheld or delayed.

     ‘ Budget Period ’ means each rolling four-week period covered by the Budget, commencing with the week of October 1, 2007.

     ‘ Material Adverse Deviation ’ means, as of the date of determination, an adverse deviation in excess of (i) 10%, in respect of the Budget line items for (x)

total receipts, (y) research and development, or (z) overhead plus distribution and freight, or (ii) $1,000,000, in respect of the Budget line item for cash flow.

     ‘ Permitted Deviation ’ means any deviation from any line item in the Budget that is not a Material Adverse Deviation.

     ‘ Waiver and Amendment to Credit Agreement ’ means the Waiver and Amendment to Credit Agreement, dated as of October 23, 2007, among the Borrower, the Administrative Agent and the Lenders party thereto.”.

          2. Section 2.01(a) is amended by (i) amending and restating the first sentence thereof as follows:

     “Subject to the terms and conditions hereof, each Lender agrees to make Revolving Loans to the Borrower from time to time during the Availability Period in an aggregate amount that would not result in the Revolving Credit Exposure of such Lender exceeding the Revolving Commitment of such Lender.”; and

     (ii) deleting the second sentence thereof.

          3. Section 2.01(b) is amended and restated as follows:

     “(b) [intentionally deleted].”.

          4. Section 2.02(b) is amended by amending and restating the first sentence thereof as follows:

     “Subject to Sections 2.07(e) and 2.14, each Borrowing shall be comprised entirely of Eurodollar Loans and maintained as such (notwithstanding anything to the contrary contained elsewhere in this Agreement or in any other Loan Document).”.

          5. Section 2.05 is amended and restated as follows:

     “SECTION 2.05. Letters of Credit . The Borrower shall not request the issuance of, and neither the Issuing Lender nor any other Lender shall have an obligation to issue, or purchase participations in, as the case may be, Letters of Credit, from and after the Amendment Effective Date.”.

          6. Section 2.08(b) is amended by amending and restating clause (iii) thereof as follows:

     “(iii) [intentionally deleted].”.

          7. Section 2.11 is amended by (i) deleting “the lesser of” and “or the Formula Amount” from paragraph (b), and (ii) deleting “clauses (a), (b) and (c) of Section 6.10” from paragraph (e) and substituting therefor “clauses (a), (b), (c) and (e) of Section 6.10”.

          8. Section 2.12(a) is amended by (i) deleting “0.75%” and substituting therefor “3.0%”, and (ii) inserting “Amendment” immediately before “Effective Date”.

          9. Section 2.13(c) is amended and restated as follows:

     “Notwithstanding the foregoing, upon the occurrence and during the continuance of any Event of Default, interest shall accrue at the rate per annum equal to two percent (2%) in excess of (i) in the case of the unpaid principal amount of any Loan, the rate otherwise applicable to such Loan as provided in the previous paragraphs of this Section, and (ii) in the case of any other amount, the rate applicable to ABR Loans as provided in paragraph (a) of this Section.”.

          10. Section 3.04(c) is amended by (i) deleting “March 31, 2006” in each place it appears and substituting therefor “the Amendment Effective Date”, (ii) deleting “and prior to the Effective Date”, and (iii) inserting “10-K,” immediately before “10-Q”.

          11. Section 3.16 is amended and restated as follows:

     “ SECTION 3.16. [Intentionally Deleted].”.

          12. Section 4.02 is amended by (i) adding the following new paragraph (d) thereto:

     “(d) The aggregate amount of cash and cash equivalents owned or held by the Borrower and its Subsidiaries (determined after giving pro forma effect to the making of each Revolving Loan and the application of proceeds therefrom and from any other cash on hand (to the extent such proceeds and/or other cash are actually utilized by the Borrower and/or its Subsidiaries on the date of the incurrence of such Revolving Loan for a permitted purpose under this Agreement other than an investment in cash equivalents or other Permitted Investments)) shall not exceed $5,000,000 (for purposes of cash denominated in a currency other than Dollars, taking the Dollar equivalent of such cash as determined on the date of the incurrence of the Revolving Loan), exclusive of proceeds of any license of intellectual property permitted by Section 6.10(e).”;

               (ii) deleting “paragraphs (a), (b) and (c)” from the last sentence thereof and substituting therefor “paragraphs (a), (b), (c) and (d)”; and

               (iii) inserting immediately before the period at the end of the last sentence thereof the following: “and a reaffirmation by the Borrower of the release set forth in Part VI of the Waiver and Amendment to Credit Agreement”.

          13. Section 5.01 is amended as follows:

               (i) paragraph (b) is amended by inserting the following immediately before the first comma:

          “(or, in the case of the fiscal quarter of the Borrower ended June 30, 2007, by November 30, 2007)”;

               (ii) paragraph (d) is amended by deleting “and” from the end thereof;

               (iii) the following new paragraph (e) is inserted immediately after paragraph (d):

     “(e) weekly, on or before the third Business Day of each week, in form and substance, and in line item detail, satisfactory to the Administrative Agent, a report specifying the variances, if any, between the results of operations for the immediately preceding Budget Period (including actual cash receipts and expenditures) and the projections for such Budget Period in the Budget, which shall be accompanied by a certificate of a Financial Officer of the Borrower certifying the Borrower’s compliance with the Budget (including the absence of any Material Adverse Deviation) and that the variance report fairly presents the results of operations of the Borrower and its Subsidiaries for the Budget Period covered thereby; and”; and

               (iv) paragraph (e) is re-lettered as paragraph (f).

          14. Section 5.02 is amended and restated as follows:

          “SECTION 5.02. [Intentionally Deleted].”.

          15. Section 5.09 is amended by inserting the following immediately before the period at the end of the first sentence thereof:

     “, provided that proceeds of Revolving Loans, and any of the Borrower’s cash on hand, may be used by the Borrower in any Budget Period only in the amounts and for the expenditures set forth in the Budget for such Budget Period, subject to any Permitted Deviation”.

          16. Section 5.12 is amended and restated as follows:

     “SECTION 5.12. Right of First Refusal .” The Borrower shall cause the right of first refusal granted by the Borrower to Infogrames Entertainment, S.A. on the terms set forth in Exhibit A to the Waiver and Amendment to Credit Agreement to remain in full force and effect through and including the 90th day after the effectiveness thereof.”.

          17. Section 5.13 is amended and restated as follows:

          “SECTION 5.13. [Intentionally Deleted].”.

          18. Section 6.01 is amended by amending and restating paragraphs (e), (f) and (h), respectively, as follows:

     “(e) [intentionally deleted];”;

     “(f) [intentionally deleted];”; and

     “(h) [intentionally deleted].”.

          19. Section 6.02 is amended by amending and restating paragraphs (c) and (d), respectively, as follows:

     “(c) [intentionally deleted]; and”; and

     “(d) Liens created by the Collateral Documents.”.

          20. Section 6.04 is amended by amending and restating paragraphs (e), (g) and (i), respectively, as follows:

     “(e) [intentionally deleted];”;

     “(g) [intentionally deleted];”; and

     “(i) [intentionally deleted].”.

          21. Section 6.07(e) is amended and restated as follows:

     “(e) [intentionally deleted].”.

          22. Section 6.10 is amended by (i) amending and restating paragraph (d) as follows:

     “(d) [intentionally deleted]; and”; and

     (ii) amending paragraph (e) by deleting “in the ordinary course of its business”, and inserting the following immediately before the semicolon at the end thereof:

     “, so long as the aggregate value of all such licensed intellectual property does not exceed $8,500,000 at any time, and that all such licenses are on terms and subject to documentation in form and substance reasonably satisfactory to the Administrative Agent”.

          23. Section 6.12 is amended and restated as follows:

     “SECTION 6.12. [Intentionally Deleted].”.

          24. Section 6.13 is amended and restated as follows:

     “SECTION 6.13. [Intentionally Deleted].”.

          25. Section 6.14 is amended by deleting “$750,000” and substituting therefor the following: “the amount set forth in the Budget”.

          26. Section 6.15 is amended and restated as follows:

     “ SECT